US Smartphone maker Apple is demanding assurance from the government on duty exemption for import of components. Apple which is planning to set up an assembling plant in India is seeking the continuation of the present countervailing duty exemption (CVD) on the import of components. As per the existing policy, components of mobile phones are excepted from countervailing duty.
Apple fear that government may withdraw the duty exemption in future to promote domestic production of components. Countervailing duty is imposed on imported commodities because producing countries usually gives production taxes to such goods to promote their exports.
At present, the government’s policy is to encourage assembling of phones domestically as the industry is not competitive enough to manufacture various components. But in the future, once the component industry grow here, the government may change it and may impose countervailing duty to protect domestic component manufactures.
Apple’s plan is to import components and assemble for the Indian market. Once the duty exemption on components goes, the company fears cost escalation. But assurance on CVD need state’s cooperation as the CVD is integrated with the GST. Here, Apple should consult the concerned state for certainty on tax exemption in future.